Employment Law Alert : Gibbons P.C.: Labor Relations, Employment Contracts, Employee Benefits, & Wrongful Discharge Lawyers & Attorneys

On Monday, May 5, 2013, New Jersey Governor Chris Christie issued a conditional veto of Assembly Bill No. 2878, the controversial piece of proposed legislation that sought to bar most employers from requiring current or prospective employees to provide user names or passwords to social networking accounts and from inquiring as to whether current or prospective employees even had social networking accounts.

In his veto message, Governor Christie recognized the importance of protecting the privacy of job candidates and employees at the heart of the “well-intentioned” bill, but noted that such privacy concerns “must be balanced against an employer’s need to hire appropriate personnel, manage its operations, and safeguard its business assets and proprietary information.”

Accordingly, Governor Christie recommended several amendments to the bill. First, the conditional veto deleted the entire section of the bill prohibiting employers from requiring or requesting that an employee or prospective employee disclose whether he or she has a social networking account. The conditional veto also struck the section of the bill providing a private right of action to aggrieved employees and prospective candidates against employers. In an apparent effort to offer more protections to employers, the conditional veto added language granting employers the right to conduct investigations to ensure compliance with applicable laws, regulations or “prohibitions against work-related misconduct” based on specific information on an employee’s personal account and also the right to investigate employee’s actions regarding the transfer of certain proprietary information to an employee’s personal account. Finally, the conditional veto granted employers the right to view, access or utilize information about current or prospective employees that can be obtained in the public domain.

• Email This
• Print
• Comments/Questions
• Trackbacks
• Share Link

The federal government continues to take aim at those who violate trade secrets rights. On December 28, 2012, the Theft of Trade Secrets Clarification Act of 2012 (S. 3642) became law, expanding the definition of trade secrets under the Economic Espionage Act (EEA). In addition, as previously reported in a Gibbons IP Law Alert blog, the President is expected to sign legislation recently passed by Congress that triples the damages for a violation of trade secrets protection laws and provides technical changes to patent applications and protections. Also worthy of note is an 82-page report from the U.S. Department of Justice issued last month detailing federal enforcement efforts concerning trade secrets theft.

Theft of Trade Secrets Clarification Act of 2012

The broadened definition of trade secrets as defined by the Theft of Trade Secrets Clarification Act of 2012 (“TTSCA”) makes clear that trade secrets protected by the EEA may be those merely “related to” a product or service used in or intended for use in interstate or foreign commerce, even if the trade secret itself is not used directly in such a product or service. In other words, protected trade secrets now encompass technical know-how that need not become part of a product or service. The TTSCA is Congress’ answer to a Second Circuit decision in United States v. Aleynikov on February 16, 2012, as previously reported in a Gibbons IP Law Alert blog. There, in reversing a jury verdict for the United States, the Court held that, although the defendant, a computer programmer, breached his confidentiality agreement with his employer, Goldman Sachs, when he misappropriated a proprietary computer code for the employer’s high-frequency trading system, he should have never faced criminal charges for his conduct under either the EEA or the National Stolen Property Act (“NSPA”). Specifically with regard to the EEA, the Court ruled that the defendant had not stolen trade secrets related to “a product made for the purposes of interstate or foreign commerce.” The Court similarly found that the defendant had not stolen a “good,” i.e.  tangible property, as defined by the NSPA. Critical to the Court’s ruling was that Goldman Sachs’ trading system supported by the stolen computer code was used internally and not in a product or service sold commercially. That the computer code was used by Goldman Sachs to generate trades in interstate and foreign commerce did not afford it protection under the EEA. As a result of the TTSCA, however, a theft such as the one that occurred in Aleynikov would violate the EEA.

Justice Department’s Summary of the Major U.S. Export Enforcement, Economic Espionage, Trade Secret and Embargo-Related Criminal Cases

The above-noted Justice Department report details the more significant and recent enforcement actions by Federal Government agencies against private individuals and companies. The report, called the “Summary of the Major U.S. Export Enforcement, Economic Espionage, Trade Secret and Embargo-Related Criminal Cases,” summarizes “cases resulted from investigations by the Department of Homeland Security’s U.S. Immigration and Customs Enforcement, the Federal Bureau of Investigation, the Department of Commerce’s Bureau of Industry and Security, the Pentagon’s Defense Criminal Investigative Service and other law enforcement agencies.” Many of these cases resulted in criminal penalties, probation and/or monetary fees. More of these cases are likely in light of the recent litigation.

• Email This
• Print
• Comments/Questions
• Trackbacks
• Share Link

A Pennsylvania Federal District Court has decided that an employer did not violate the Federal Computer Fraud and Abuse Act (“CFAA”) or the Federal Lanham Act, when it took control of a departed employee’s LinkedIn account. The Court ruled that (1) the CFAA, which in part prohibits unauthorized access to a computer with the intent to defraud, did not come into play and (2) no trademark infringement in violation of the Lanham Act had occurred.

Factual Background

In Eagle v. Moran et al. plaintiff Eagle was employed as the CEO of Edcomm, Inc., a company that provided training services. In accordance with company practice, Eagle set up a LinkedIn account and gave another employee the password to her account. Edcomm followed a policy of asserting “ownership” over the account when an employee departed the Company; it would extract data and incoming information from the LinkedIn account, but took steps to avoid stealing the former employee’s identity. After Eagle’s involuntary termination, Edcomm used her password to change Eagle’s LinkedIn profile to that of the incoming CEO, and it replaced the photographs and information to reflect that of the new employee. Plaintiff claimed that when searches were done for her, the name and photograph of her replacement was displayed, yet Eagle’s awards, recommendations and contacts remained unchanged. In her lawsuit, Plaintiff claimed violations of the CFAA, the Lanham Act and state common law arising from the loss of business opportunities, relationships, reputation and trust caused by the change to her LinkedIn profile.

Court’s Ruling

In order to prove a violation of the CFAA, a federal statute that prohibits unauthorized access and use of computers, a plaintiff must show actual damages. As the Court held, potential loss of future business -- particularly as plaintiff speculatively claimed -- is insufficient. Similarly, a loss to one’s reputation or relationship with clients does not arise to the level of a CFAA violation. The District Court dismissed Eagle’s CFAA claim, finding that Eagle’s simply claiming a loss of business opportunities by her lack of access to and control of her LinkedIn account for four months, failed as a matter of law to establish a CFAA violation. In addition, plaintiff was not claiming a monetary loss because her computer was inoperable or she expended money to repair damage to it (typical of a CFAA claim).

• Email This
• Print
• Comments/Questions
• Trackbacks
• Share Link

The right of public access to information about sexual harassment claims brought against a public entity is the focus of a recent decision of the Superior Court of New Jersey, Law Division (Atlantic County). The decision illustrates the interplay between the common law right of access to government records and the New Jersey Open Public Records Act (“OPRA”), as well as the importance of making a request for a government record under both.

In John Paff v. City of Brigantine, decided by The Honorable Nelson C. Johnson, J.S.C. (author of the book, Boardwalk Empire, late of HBO fame), the plaintiff, a public access advocate, sought a report prepared by an outside attorney retained by the City of Brigantine to conduct an independent investigation regarding allegations of sexual harassment against the City’s Chief of Police. Plaintiff sought access pursuant to both OPRA and the common law. The OPRA request was denied. OPRA specifically exempts from the definition of a government record, and thus from public access, “ … information generated by or on behalf of public employers or employees in connection with any sexual harassment complaint filed with the public employer …”

• Email This
• Print
• Comments/Questions
• Trackbacks
• Share Link

In this technology age, employees increasingly make personal use of workplace electronic communications applications. The legal ramifications of such personal use – and how employers can create policies that balance the right to monitor the workplace with employees’ expectations of privacy – were examined in an informative panel discussion, “Electronic Communications Policies in the Wake of Stengart and Quon” during Gibbons P.C.’s Fourth Annual E-Discovery Conference on October 28, 2010.

Discussion regarding Stengart

The panel kicked off with a discussion of the New Jersey Supreme Court’s March 30, 2010, ruling in Stengart v. Loving Care, which presented novel questions about the extent to which an employee could expect privacy and confidentiality in personal e-mails with her attorney that she accessed on a computer belonging to her employer. The Court held that an employee did not waive the attorney-client privilege when using a company computer to communicate with her attorney via a personal password-protected e-mail account, and that attorneys for the employer who failed to turn over the attorney-client communications found on the computer were subject to sanctions.

A panel member explained that Stengart does not prevent employers from implementing and enforcing unambiguous electronic communications policies or from monitoring employee communications pursuant to such policies. Nor does it prevent employers from imaging and reviewing the contents of an employee’s computer in conjunction with a lawsuit. Employers, however should refrain from reading any communications between an employee and her attorney uncovered as part of such reviews. For further discussion of the Stengart case, see the article co-authored by Richard Zackin and Kristin Sostowski.

• Email This
• Print
• Comments/Questions
• Trackbacks
• Share Link